Boeing-Embraer Deal Approved

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Boeing and Embraer now have all the approvals they need to move forward with two joint ventures that will change the commercial and perhaps military aircraft market. Boeing will take over 80 percent of the Brazilian company’s passenger plane business and will also take a 49 percent stake in the development of the KC-390 military transport. Both the Brazilian government, which has veto power over Embraer’s decisions, and the company board of directors have approved the deal. All the paperwork is expected to be done by the end of 2019. The government had sovereignty concerns about allowing such a large foreign investment but Boeing and Embraer were able to convince officials the deal would be good for the country and the company.

Under the deal, Boeing will take over the day-to-day management and operation of the commercial aircraft operation, allowing it to compete directly with Airbus in the small airliner business. Airbus assumed control of Bombardier’s CSeries airliner business last July and the rebranded A220 has attracted some large orders since then. Embraer’s answer to the A220 is its E series of airliners, which effectively had the 100-160-seat market to itself until CSeries entered service in 2016. It hasn’t been announced if the E-series will be rebranded with a Boeing nameplate.

The joint venture on the military aircraft could expand cooperation on marketing the aircraft, which is seen as a faster, more capable and cheaper-to-run alternative to the venerable C-130. The KC-390 is a twinjet that can carry 57,000 pounds, compared to 42,000 for the Herc. Brazilian media has reported that Boeing may build the KC-390 in the U.S., making it easier to offer the aircraft to U.S. military forces. Embraer put the KC-390 through its paces at Farnborough last summer.